2018 ANNUAL REPORT - UA Newsroom

[Pages:100]2018 | ANNUAL REPORT

TRANSFORMATION

MISTY COPELAND

JOEL EMBIID

2018 UNDER ARMOUR ANNUAL REPORT

JORDAN SPIETH

INNOVATION

2018 UNDER ARMOUR ANNUAL REPORT

UA SPEEDPOCKETTM: UNDER ARMOUR'S REVOLUTIONARY STORAGE SYSTEM KEEPS RUNNER'S ESSENTIALS STABLE

UA HOVRTM INFINITE: DIGITALLY CONNECTED, ZERO GRAVITY FEEL

STEPHEN CURRY: 3X NBA CHAMPION & 2X NBA MVP; CURRY 6 FEATURING UA HOVR TECHNOLOGY

ANTHONY JOSHUA: WORLD HEAVYWEIGHT CHAMPION;

UA RUSH APPAREL

SHAREHOLDER | LETTER

To Our Shareholders,

2018 was a productive, evolutionary year for Under Armour ? one that demonstrated measured progress against our strategic, operational and cultural transformation.

Amid our focus on executing against a number of business ??????????????????????????????????????????????????? expectations. Revenue grew 4 percent to reach $5.2 billion including balanced growth from our wholesale and DTC businesses, which were up 3 percent and 4 percent, respectively. Our international business was up 23 percent led by continued ????????????????????????????????????????????????? 2 percent as we executed against inventory management initiatives designed to better position ourselves for operating ????????????????????????????????????????????????? unchanged from the prior year at 45.1 percent, or up 30 basis points to 45.5 percent on an adjusted basis, which excludes the ??????????????????????????????

We also made progress with respect to SG&A expenses which were up 4 percent in 2018, following 14 percent growth in 2017 and 22 percent growth in 2016. Adjusted operating income was $179 million, or a $25 million operating loss on a GAAP basis. Adjusted diluted earnings per share of $0.27 represented a 42 ??????????????????????????????????????????????? $0.10 of diluted loss per share.

???????????????????????????????????????????????????? main strategies we executed against in the second year of our ???????????????????????????????????????????????? mission and vision; a renewed consumer centric approach; and, ???????????????????????????????????????

First, is our brand promise which is to inspire, enable and empower human performance through innovative athletic products and compelling experiences. It's our past, present and future ? an emphasis we believe will prove to be our greatest strength. And it's this relentless pursuit of advancing athletic ????????????????????????????????????????????????? ???????????????????????????????????????????????? imagine living without. In this pursuit, Under Armour's mission is ???????????????

In 2018, we delivered on our promise, vision and mission. Within ???????????????????????????????????????????????? ??????????????????????????????????????????????????? ??????????????????????????????????????????????????? driving newness, innovation, and style to our consumers through ???????????????????????????????????

Our footwear business also saw a major evolution with the launch of our new cushioning platform ? Under Armour HOVR starting in running with the Sonic and Phantom styles and ????????????????????????????????????????????????? the Curry 5, Curry 6, Breathe Lace and Forge96 continued to authenticate our unique value proposition of meaningful innovation coupled with style and a strong design point of view.

??????????????????????????????????????????????? ??????????????????????????????????????????????? opportunity, strengthen our brand position and truly understand how to maximize the emotional and functional expectations ???????????????????????????????????????????????? intersection of demand centric growth and a consumer's ??????????????????????????????????????????????????

2018 UNDER ARMOUR ANNUAL REPORT

SHAREHOLDER | LETTER

2018 UNDER ARMOUR ANNUAL REPORT

??????????????????????????????????????????????????????? growth.

?????????????????????????????????????????????????? ????????????????????????????????????#?????? Centered in a holistic structural and process realignment of our category, strategy and product teams with our regional, ???????????????????????????????????????????????? supports greater internal and external alignment enabling ?????????????????????????????????????????????????? serving our consumers and customers.

As we closed out the year, we held an investor meeting where ??????????????????????????????????????????????????? ????????????????????????????????????????????????????? ???????????????????????????????????????????????????? ?????????????????

? ????????????????????????????????????????????????? product and experiences;

? Becoming consumer centric by harnessing data science and analytics along with the world's largest digitally ??????????????????????????????????????? engagement, preference and consideration;

? Continuing to elevate investments toward the largest, highest return growth opportunities including the ???????????????????????????????????????????????? women's businesses;

? Emphasizing digital engagement and conversion, and retail excellence;

? Protecting the brand through selective, optimal and premium wholesale distribution; and,

? Delivering balanced, sustainable earnings growth through ??????????????????????????????????????????? strategic growth initiatives to drive consistent shareholder return.

As we turn the corner into 2019, we remain resolute in Protecting This House ? the Under Armour brand ? and ????????????????????????????????????????????????????? With a stronger foundation and greatly improved execution ability, we are gaining momentum and earning every moment, experience and engagement with our consumers, customers and shareholders.

??????????????????????????????????????????? ?????????????????????????????????????????? command of our business and actively applying the lessons we've learned by capitalizing on our strengths to optimize the numerous opportunities ahead for Under Armour. I am incredibly proud of what we have accomplished throughout ???????????????????????????????????????????????? ????????????????????????????????????????????????? ? we are running hard toward solidifying ourselves as one of the ?????????????????????????????????????????????

??????????? ?????????????????????????????

2018 UNDER ARMOUR ANNUAL REPORT

MOMENTUM

DWAYNE "THE ROCK" JOHNSON LINDSEY VONN

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________

Form 10-K

(Mark One)

______________________________________________

? ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018 or

? TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to

Commission File No. 001-33202

______________________________________________

UNDER ARMOUR, INC.

(Exact name of registrant as specified in its charter) ______________________________________________

Maryland

52-1990078

(State or other jurisdiction of incorporation or organization)

1020 Hull Street Baltimore, Maryland 21230

(Address of principal executive offices) (Zip Code)

(I.R.S. Employer Identification No.)

(410) 454-6428 (Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Class A Common Stock Class C Common Stock

(Title of each class)

New York Stock Exchange New York Stock Exchange (Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ? No ?

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ? No ?

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ? No ?

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (?229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes ? No ?

Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 or Regulation S-K (?229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ?

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ?

Accelerated filer ?

Non-accelerated filer ? (Do not check if a smaller reporting company)

Smaller reporting company ?

Emerging growth company ?

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

?

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ? No ?

As of June 29, 2018, the last business day of our most recently completed second fiscal quarter, the aggregate market value of the registrant's Class A Common Stock and Class C Common Stock held by non-affiliates was $4,163,565,041 and $4,673,904,814, respectively.

As of January 31, 2019, there were 187,788,898 shares of Class A Common Stock, 34,450,000 shares of Class B Convertible Common Stock and 226,515,394 shares of Class C Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE Portions of Under Armour, Inc.'s Proxy Statement for the Annual Meeting of Stockholders to be held on May 9, 2019 are incorporated by reference in Part III of this Form 10-K.

UNDER ARMOUR, INC.

ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS

PART I.

Item 1. Business

General

1

Products

1

Marketing and Promotion

2

Sales and Distribution

3

Seasonality

4

Product Design and Development

4

Sourcing, Manufacturing and Quality Assurance

5

Inventory Management

5

Intellectual Property

6

Competition

6

Employees

6

Available Information

7

Item 1A Risk Factors

8

Item 1B Unresolved Staff Comments

21

Item 2 Properties

22

Item 3 Legal Proceedings

22

Executive Officers of the Registrant

22

Item 4 Mine Safety Disclosures

24

PART II.

Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

25

Item 6 Selected Financial Data

27

Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations

28

Item 7A Quantitative and Qualitative Disclosures About Market Risk

45

Item 8 Financial Statements and Supplementary Data

47

Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

84

Item 9A Controls and Procedures

84

Item 9B Other Information

84

PART III.

Item 10. Directors, Executive Officers and Corporate Governance

85

Item 11 Executive Compensation

85

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

85

Item 13. Certain Relationships and Related Transactions, and Director Independence

85

Item 14. Principal Accountant Fees and Services

85

PART IV.

Item 15. Exhibits and Financial Statement Schedules

86

Item 16 Form 10-K Summary

N/A

SIGNATURES

89

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download